Kravis opts to fix roofs, pursue suit

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Kravis opts to fix roofs, pursue suit

By By Jan Sjostrom, Daily News Arts Editor

http://www.palmbeachdailynews.com/news/content/news/KravisDamage0804.

html

Thursday, August 04, 2005

Palm Beach County

The Kravis Center has joined the ranks of Floridians wrangling with

their insurance companies over losses sustained in last fall's

hurricanes. In a suit filed in Palm Beach County Circuit Court, the

performing arts center is seeking $29 million in damages from its

insurance carriers and agent.

The suit alleges that Lexington Insurance Co., Allied World

Assurance Co. and Allianz Global Risks have breached their contracts

with the center. It states that the carriers " have wrongfully

delayed resolution of the claims and exposed the buildings and their

contents to greater risks than initially insured against, because

the structures and their roofs are now more vulnerable to storm than

at the time initially insured. "

The suit, which was filed March 10, claims that insurance agent Neil

Hewitt was negligent because he obtained tiered policies for the

center that " subject the plaintiff to inconsistent and conflicting

rights, procedures and remedies " and " delays in resolution of

claims " and failed to coordinate the policies and claims.

Lexington and Allied have not filed responses to the suit. In its

response, Allianz says it can't determine what its obligations may

be, because its policy kicks in only after the Kravis has paid a $2

million deductible for each storm and Lexington and Allied have paid

$10 million per storm.

Hewitt's response says he can't be sued until the disputes with the

insurance carriers are resolved. Attorneys for Lexington, Allied and

Hewitt could not be reached for comment. Allianz's attorney declined

to comment.

" There's a game being played by the insurance companies to make this

a two-storm situation, ergo, two deductibles, " said Justus Reid, the

Kravis' attorney. " That cuts down the amount they have to pay. In

reality, while there were two named storms, you could not repair

what happened from the first storm by the time the second got here.

Our position is that everything occurred as a result of the first

storm. Thereafter, whatever happened was an aggravation of a pre-

existing condition. "

A new law passed by the state Legislature forbidding insurance

companies to charge more than one deductible per hurricane season

applies only to homeowners.

Reid said the parties have attempted to settle the dispute out of

court, but " it's doubtful it will be resolved. "

Images of a piece of the Cohen Pavilion's year-old roof lolling over

the side of the building were widely circulated after Hurricane

Jeanne struck Sept. 25. The roofs on both the Cohen and Dreyfoos

Hall were destroyed during hurricanes Jeanne and Frances, which were

20 days apart. The Kravis has spent $1.6 million on temporary roof

repairs, new drywall and carpeting, and other measures to keep the

center open, but has received no payments from its insurers, Chief

Executive Officer Judith said.

Unwilling to wait until the claims are resolved, the Kravis board

has authorized the center to spend $4.6 million from its reserves to

replace the roofs. " We need to do it before the next hurricane, " she

said. " It would be a real problem if we got hit by another

hurricane. "

The contract allows the builder up to seven months to finish the

job, but Kravis officials don't expect it to take that long.

Although the Kravis has taken stop-gap measures to protect the

buildings and ensure good air quality, " we've had continual moisture

penetration, " said Jim , senior director of building and

production services. There's been no trace of mold that shut down

the federal courthouse in West Palm Beach, he said.

The Kravis' claim encompasses not only immediate damage, but also

future consequences of the storms, center officials said. " We've got

significant damage, " Jim said. " We've got a deteriorating

stucco system. We've got rusting electrical equipment. We've got a

deteriorating rigging system. It's more than meets the eye. "